SFC Launched Consultation on Conduct Requirements for Capital Market Transactions

Fazzaco has learned that the Securities and Futures Commission (SFC) today launched a consultation on conduct requirements for capital market transactions in Hong Kong. 

The proposed requirements would help clarify the roles played by intermediaries in equity and debt capital raisings and set out the standards of conduct expected of them in bookbuilding, pricing, allocation and placing activities.

A separate “sponsor coupling” proposal would require that, for an initial public offering of shares, at least one head of the underwriting syndicate would also act as a sponsor .

Mr Ashley Alder,  the SFC’s Chief Executive Officer, commented,“Hong Kong is one of the world’s largest capital raising centres. It is therefore vital to promote high standards of behaviour amongst those who arrange offerings. Our proposals for clear conduct guidance for intermediaries participating in securities offerings are consistent with global regulatory standards and will boost overall investor confidence in our markets.”  

According to the offical press, the proposals were formulated based on recent reports issued by the International Organization of Securities Commissions (IOSCO) to address conflicts of interest and associated conduct risks in equity and debt capital raisings as well as on the SFC’s observations from a thematic review of selected licensed corporations involved in these activities. In formulating the proposals, the SFC conducted extensive soft consultations with industry participants, including both buy-side and sell-side firms.